A slowdown in the economy and a massive influx of counterfeit drugs are among the major reasons drug makers in Nigeria have a hard time reaping the benefits of operating in a populous market.
Since 2015, sales in the Nigerian pharmaceutical industry have declined by 35.7 percent with no signs of improvement, according to data tracked by global rating agency, Fitch.
Cheap and easily available, counterfeit drugs smuggled through the country’s porous borders find their way into a vast distribution network. These drugs affect the health of both the economy and the individuals that patronise them.
“Nigeria is estimated to lose about N200 billion annually to counterfeit medicine (excluding substandard drugs),” according to a 2019 PwC report on how abuse of patents and copyrights affects the economy.
Tens of thousands of deaths in the country are attributed to fake medicines.
Because genuine drugs are out of reach for many cash-strapped Nigerians, they often resort to fake ones.
As a result, sales in the Nigeria pharmaceutical industry have declined by over 35.7 percent since 2015 and expected to fall even more, noted Fitch Solutions in its report ‘Nigeria Pharmaceuticals and Healthcare’.
At the peak of the recession in 2016, drug makers saw their sales drop by 20 percent to $722 million from the $904 million made in 2015. And despite a rebound in the economy in 2017, sales fell further by 11.9 percent to $636 million but rose to $666 million in 2018.
Though the sales grew slightly by 4.7 percent to $666 million in 2018, Fitch projects it to grow by almost the same amount in 2019 to $698 million. However, this growth is expected to be short-lived as the sector is expected to decline by 0.6 percent a year between 2019 and 2023.
The reason for this decline is that Africa’s largest economy has emerged a hotspot for the manufacture and sale of fake drugs. Hence, despite efforts by the World Health Organisation (WHO) to support local drug manufactures in improving competitiveness with foreign generic drug makers, the effect is still not felt as drug makers are challenged with imitated drugs that are fake.
According to the Pharmaceutical Security Institute, countries in Asia have been identified to produce the largest share of counterfeits globally with about 50 percent finding their way to Nigeria.
Ayorinde Akinloye, consumer goods analyst at Lagos-Based CSL Stockbrokers, reckoned that in reality, pharmaceutical consumptions in the country are not declining especially given the fact that the health sector is one of the basic sectors.
However, what has happened is that many Nigerians have moved from the formal market to either the informal or illegal market.
“There has been a surge in the purchase and consumption of home-made herbal products which are not captured in the data for pharma sales,” he told BusinessDay.
Africa’s largest economy for almost four years has seen output growth below population levels, an affirmation of falling per capita income and increasing poverty.
Data obtained from the International Monetary Fund (IMF) show that GDP per capita growth in Nigeria has been negative since 2015, declining at an average of -0.63 percent annually. Analysts say a fall in the standard of living makes the proliferation of fake drugs possible.
There is, however, a fair twist to this story as data tracked by the Organisation for Economic Co-operation and Development, an intergovernmental economic organisation with 36 member countries, show that 58.5 percent of counterfeit and pirated products traded worldwide were sold to consumers who actually knew they were buying fake products.
“Counterfeit trade hurts businesses and results in loss of business for brand owners, loss of jobs, loss of incentive to innovate as well as reduction in quality of goods and available alternatives,” said Babatunde Irukera, director general, Federal Competition and Consumer Protection Commission (FCCPC).
Makers of these products offer no protection to consumers; no traceability; no warranties and no guaranties, Irukera noted. Nigeria, in a bid to fight the war against fake drugs, has come up with a number of legislations including the Counterfeit and Fake Drugs and Unwholesome Processed Foods (Miscellaneous Provisions) Act, and the National Agency for Food and Drugs Administration and Control (NAFDAC) Act. Under the former Act, purveyors of fake foods could be fined up to N500,000 and imprisoned for as much as 15 years, while NAFDAC assesses the durability of goods, registers them accordingly and has the power to seize and destroy counterfeit goods.
However, despite all these agencies established to tackle the maladies, the issue of fake drugs has continued to be a thorn in the flesh and proving almost impossible to solve.
PwC, however, noted that while the regulatory and agency instruments play perhaps the strongest role in curbing the manufacturing and spread of fake drugs, innovative technology can also play a huge role.
“RxAll, for example, is a proprietary molecular sensor device that uses an Artificial Intelligence algorithm to carry out non-destructive drug authentication. There are also other start-ups like mPedigree Network and Sproxil, which allow consumers to text the codes on drugs purchased to a number to verify the authenticity. Enforcement of regulation and strengthening of agencies coupled with innovation will continue to be the biggest drivers in remedying the fake drug epidemic,” PwC said.
If strict reforms are not taken to solve this, a double jeopardy would continue to befall the economy and the drug industry since a sick population is unproductive and thus lacks purchasing power to buy genuine drugs.
MICHAEL ANI
